Ferrellgas Partners (FGPR) 7 Jun 182018 Q3 Earnings call transcript

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ferrellgas Partners Third Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the presenter's remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Financial the Chief begin you your conference. Officer Schwartz, company, of may Doran

and our welcome call. Rob you, Thank to for us. Thank third joining you earnings quarter

Securities and XX-Q you like our with in appropriate Before materially found started, we of this business considered to from documents to excited factors time filed growing factors GAAP non-GAAP progress forward-looking other risks, These this to Exchange could that various our the refer reconciliations flows. be some Form be are that can the and morning. anticipated our our and remind call we performance. and call, We're from press may statements I'd Commission. Form file Throughout discussed measures, differ all strategies time uncertainties continued get the cash and of cause measures report during made will release our performance non-GAAP or XX-K our of on we in to other actual measures our to in to

now increasing million, weather of $XX reduction at fiscal with cost favorable million. coupled our with $XXX cash particularly to XX-month end had last growth up year, trailing from EBITDA initiatives the internal and in and flows $XXX customer million April Our is the compared at grown by rate XXXX of

are up of credit $XXX also $XXX with we've the a term the million and accounts $XXX no significant and our capital outstanding. repaid allows on which facility, increased in facility loan substantial securitization strategies our to that These as needed operate multiyear $XXX million million of and number facilities execute fiscal of us sheet customers the million credit for to important working with outstanding and key current revolver of $XXX to million a million also also access previous allowing of and grow to successfully foundation up closed million new liquidity previously. placed balance outstanding borrowings facility on sheet We wrap continue is over a These to liquidity Also growing as taking provide value our receivable comprised revolver. we XXXX balance our cash for from the business amounts renewed letters a and us and a working $XXX and facility $XXX strengthen business This approximate issuance provides and and with and serve. access provide steps on now to two the focus creating shareholder efficiently continue we we of effectively flexibility long-term. we capital, will

recent opportunities oil drilling compared Propane detailed activity, our in as up $XX last and million compared occurred Midstream is as and by positively the our compared our million year. a QX development year. in filed Now results sale higher for earlier to prices. which segment million and positioning gross the of QX $XX.X prior-year. expected was margin. the over to in low-margin growth million Adjusted impacted of the both increase The to for was operations Energy this EBITDA due from as that for EBITDA the of LLC, $X third Midstream XX% year, in prior quarter for morning, to volumes was oil cessation was segment at negative XX% Form the an segment quarter million Adjusted $XXX,XXX The for XX.X% for adjusted barge was and are an by Bridger EBITDA increase quarter $XX.X EBITDA higher this driven that reflect higher $XX.X XX-Q

weather the tank million volumes compared up $XXX year's ago, for $XXX sales Gross Rhino quarter, benefited for April. quarter gallons prior to and sorry, exchange million from slightly driven by compete and result quarter. Gross customers. gross were from that's gallons the million volumes, the million a last quarter of in On total profit total for gallons up favorable higher the was third XX% profit XX% lower $XXX.X the retail per gross the year million Blue strategy Propane $XXX particularly from offset sold, $XXX profit, in largely volume up the million, particularly third year. customer profit or margins of sales partially side, for new growth by the propane to was the $XXX company's

and the slightly the million, Interest year year. the for third $XX slightly million was associated rates increase reflecting compared during for for the compares quarter that's from quarter year operating $XX.X sold. the a facility quarter to million up the expense primarily higher expenses General, last was administrative was was quarter $XXX.X to up million, last last due $XX.X line secured previous million to the expense G&A gallons to operating On ago, the incremental the expense credit from in again borrowing items, quarter that $XXX.X expense that's million, up year. once under $XX.X with

we from or trailing in retail the $X.X was a quarter, CapEx million our continue $XX X.X maintenance is capitalized fleet DCF cash growth up of distributable end and increases well grow million of vehicle forecast side on foreseeable million for distribution locations. level the increase year-to-date year-to-date, the we and refresh on customer flows and front, equating the million that's on selling was to set X.XX support as million with to coverage new flow related the associated at its current million was purchased CapEx the the CapEx tank as costs fiscal it's $XX XX-month for basis, and we $XX.X number primarily And for times, cash increase sales up on to maintain our cages coverage Based ratio our times future. expect at of in QX, $XX.X to of quarter the to Our and exchange as $XX.X locations as an cylinders

Jim the this time, I'll for to at comments, Now call over Jim? turn his

the with momentum in continued performance pleased business. I'm third company's our the and are quarter Doran. we in our seeing Thanks very

strategy Our is working.

gallons are a base our with We expense density in focus operating sold costs. higher per on lower our growth and seeing customer and

we're pleased, satisfied. yes, but So yet not

the more customers. recent and sales adding in in sales a across We continue a our to do theme objectives, momentum professionals weather. by of have focused updates We're key enhancing to by growth even cover and on and I to all and additional to process factor driven swings we'll ahead. actually operational the is key marketing managing potential and new big efforts that want caused to winning in of strategic common reach mitigate more charge customers. markets to the country EBITDA We're

compared customer customer up with gallons well X.X% part prior The customers that now realized force to which existing retail propane stocks. tank a broken This density, opportunity XX,XXX was of growth levels. of We Our about the retail offices. additional now silo earlier has customers in the exchange between we've our the strategy. as Doran a to sales as to less new efficiently retail core now in major more add business strategy year customers, develop key sell has company win down. distance improved our We've growth talked volume become tank with a exchange to

at close We are the we gallon $X.XX quarter. Blue continue X,XXX the the expenses down had beginning see per this year. for with to exchange by There more XX,XXX Rhino to working than signs locations, of now operating of tank

acquisitions become that to tremendous growth of spring position seasons, bolt-on lines We growing about people and footprint significant offsetting country, are growth less well they buying and and for on opportunities hear for further and seeing customer fall of with our business season heating With we know our us locations sales strategy our as benefit peak to strategic for arise. growth. winter volumes summer's of XXX across to this opportunities the the patio the look a in enhance over will continue our dependent we

operating expand to Another adding strategic costs growth. for lowering our and position initiative capacity margins by is future to

Our thousands million new plant vehicle $X and and fleet get plant year-end. by in plants and production Alabama requires operating it to $X of of an year expenses. plants $X Each Blue to the $X.X per by million costs. Rhino These investment closer hundreds online approximately repair lower of to lower but will saves us customer, fuel million miles million mileage us fiscal our per California come in

two our growth system exchange existing complement have new fiscal construction and reduce scheduled us expanding plants for business. seeing plants our capacity in 'XX significant tank plant are in our operating new We and to support while more locations the are we now. allow These evaluated being expenses to

more our repair been to able are reduce fleet us and programs. leasing the which allows and investing expense. modernized, We've improve in also to through reliability largely it age, We significantly reduce maintenance to keep

our of serve are customers that need with at locations a set where customers to grow further our they continue support customer to will to tanks focus our growth We seeing, ability in and our meet be this are condition that quickly. the can on we specific needs customer appealed and we and

operations or an new tank and customer edge then a get on the offices tanks. the revenue of and to to and CapEx help are requirements customer been need generating our where our field yard around collected idle our upgraded, be also and our to lower distributed technology we moved leading put in that are their enhance on to site be tanks our portion us do and the work, our system ability is to whether We tank demand. device wants customers mobile to This cash-out will locations business, for inventory meet inventory current support that by we now replacing outsourced our field program where will refurbishment pursuing a of quickly country, reducing our painted We've the always location refurbishment in our to back across country. where

and maximize technology our customers. experience Our on field operations the will of the help enhance of efficiency our focus

of our is profile. objective credit company strengthen to Another the

EBITDA. on foremost the company we to First and and are grow actively focused managed

right anticipate to from operational to are our for The are and Doran's level. recent debt increase or of structure will and managing complements Bridger and reduce can our totally quarter Trent Rail. our results and as employees. will We together without possible maintain the Energy the and actively on The we transactions that of would You future have depending from applauded working. current is sale Bridger These be our appointment our said without of us third as optimism Officer, business track, business the people. assets. the at we which we provide this not success driving the recent I has weather the momentum and for I of Hampton long-term the of earlier are company. our grow the highlight EBITDA we year. strategic non-core high for that I now sales for He, through been want foundation we to capital Committee that now by Executive and that same DCF universally building initiatives manage distribution and all we is sourcing strategy is on or have that The the continue are move To will point cold our Chief on and make cash our see flexibility morale before, up our our Executive global a page. and Operating the a Chief Doran

so I doing now for to questions I be what it of call company the are all. proud can will more moderator, have. employee work. to make over not is owners turn back might strengthen X,XXX doing who you the the are address the and any We necessary them we we it could

question Instructions] Mirek of Your comes Citigroup. from the Zak from first line [Operator

open. is line Your

Hi. everyone. morning, Good

Good morning.

sourcing Is at global the sale there around can time? potential any provide business this timing a of you

out close. we're fiscal would working with -- perspective timing the from done, for So and actively actively deals good working by I question, year end done these but you're towards say they're never we're until of

sufficient and Okay. or above a how the that restricted on to looking ratio do the concern sale sourcing pool, would And of perspective business that regarding 'XX, expect potential organic is before are XQ you that bring the to payment you growth fixed unit X.XX. be address holder the from a global charge solely that

Yes good question. so

obviously we to and helpful. grow to sales going EBITDA, know you de-lever ability that's helpful think be then will asset and as the I be also

announced associated in we was that on we MLP we our that options things indicated and release basically announced that types the when that the of the also different new bonds. of contemplating facility in press included solutions we credit refinancing or May, were closed or information One with

solution of And that or ideas the to in wrong think was, what so refinancing talk for I an allowed think essentially be bonds. to right of would MLP to ideas, how about more about what strategies what for and was specifics exchange that call solution, not for to exchange best on bondholders but

So now. are those essentially right conversations happening

of this there you ideas healthy is exchange the I couple feel that a good think progress point, there. at have I but a and options made we about have

which You that is and actively de-lever take or EBITDA solution we that or know you from before today the option achieve to the can the we can grow FCCR. unable are or event are refinancing times on or go MLP were basket off a we exhausted risk doing distributions the table bonds in the paying after X.XX you

working come angles. that, a pursuing it So on we're variety more right we're now would it to but from different I say of

one, ability additional just based what's to more at OLP incur one the Okay. your your and quick debt Great levels, on covenant various level?

credit have here their agreement quarter. early a we In lot in extensively, at that pretty a utilize so fiscal a QX, the our under this lot earlier more to we new facilities gone Yeah credit more under flexibility we facility. credit the announced have have flexibility covenants that financing through just we've we place

part As our at baskets and counsel we're legal that it an exactly that announcing and covenant basis, at refinancing. basis might the of others more indentures level debt what is gone bond evaluated debt in publicly unsecured could the to and about to we've that's have from our not that. OLP debt on evaluate We've is level. debt working be through relates we're We've how the available. process we various the a OLP There structures of flexibility a around the amount evaluated with end we with solutions to our thinking an down have unsecured MLP up the new OLP

on solve for and us to that notes to come there. give to MLP that credit about for we So options allows We public. tailored all flexibility the this do that. again good have included is Feel more We that. some agreement multiple X-K -- the in very

out exchange So the and we the those refinance to take also opportunity we debt move to and up secured the have to have OLP bonds down MLP the bonds. proceeds to to then those MLP opportunity

arrows to MLP a bonds. the the it quiver we in So have lot as refinancing relates of

the So OLP we look to absorb can some at will with on holder group. we more but as bond more that how debt work exactly come the

time guys. you. helpful. Thanks Thank Very for Great. Okay. the

You bet.

Fargo. comes Your Spicer next line James from question of Wells from

is open. Your line

Hey. Good morning, guys.

question a really bit, in in commitment Just to correct. to of very order times to on build notes your clearly need on half the you're that you X.XX that, last charge The little distribution. to take focused fixed coverage out only notes, the address those MLP

So to you think it about the or just is address we I'm amount when the if million need million? here, $XXX $XXX wondering really that just full

level. the from Yeah. at held No, We need technically right. consent of are you're XX% the least notes at MLP would that

that of be potential a to other Okay you just bit EBITDA then asset And then how contribution currently looking business provide global terms in sourcing big in little you and sales, sales commentary terms what of with could is at? can more around the the respect asset

is global ancillary of business It's to a propane our accessories, heaters propane sells grill, that things products that It's not business. that sells directly tied is So more real business propane. patio an and of nature. that

then as process and that community, at we buyer necessarily community. where is I out into business this set situation point -- want propane community be actively and I that the multiple it's get in separately a talking overall value we're we have that, are value expectations operations terms give EBITDA that obvious pretty to upon on really do buyer is a it's to don’t of the talking not the to So would EBITDA see. overall modest the on broken potential dependent we the what our would actually but up, buyer on that in relative seeing

a will think it, to de-lever report cash more is of structure. it on or proceeds notes the operations, of amount be we core perspective address come a what piece majority be financial us operation from that, this capital to able vast So just MLP the the I flexibility in reasonably propane our propane meaningful to allow our of but either small will have to

Mr. So is to -- that? there is in business Bar-B-Q that are sourcing addition business there effectively or the assets

Mr. it, Mr. got Bar-B-Q. You

there else of And be it. still terms in and Got at you looking Okay. other that you are then I anything that assets are midstream know you some trucks non-core? guys could know, have

We're answer that think I looking yes. the is to everything. at

Yes.

that got, to are being their that that feels I'll Yes the to work. opportunities for said, that's sand better a taking trailers number oil more the seeing the be results midstream all ago. actively look talk either ready group new that nearly provide of you does A now we customers ready and putting the it have we're just sheet. higher then you, is in trailers year of producing flexibility contribution and saw we've a many segment way year they be in that occur been global the refurbishment that need at idled be much expanding higher are still to stabilized, to trucks with on midstream, there tell too in in won't they piece that anticipated when It meaningful now seen say the our our recently. are we would've going than going balance price the or in Texas, sourcing A, operation. we it are to costs now we've MLP also just or road address handle with here obviously we've environment cash as so business for a got down lot them for financial us refurbish new We existing cash we're and been that's but it of the then development to customers the and online EBITDA them fleet with that it saltwater in quarter a example, midstream grow notes proceeds coming to for fracking more rightsizing associated trucks work able the to as with oil basically -- this see example, need de-lever But that, get so to disposal a for opportunities business. terms did with what and So Plano,

Okay. Got it. you very Thank much.

Yes.

Your from Tarek from comes Instructions] Hamid JPMorgan. next line [Operator of question

open. Your line is

Good morning.

morning. Good

sort at in is good driven lot increase do As we a portion there over look with SG&A customer of that's probably you increases. temporary, and of time? I guess how the about is sort that of that Is think OpEx volume obviously a reasons of that, acquisition that

Yeah OpEx of is of larger associated more to that I hours going propane. with did personnel more be and to deliver in terms we people say would one from more largely it's

variable a that to tied deliver component heavily there we then propane. and reported it's So more to miles obviously

costs So fuel up well. as were

So it's, I'd say largely a variable component.

the about gets think acquisition actually costs, that we customer capitalized. a of As lot

set by over base grown we out, tank. XX,XXX. year. our net new customer we a We've set this go X,XXX So tanks We've

we capital we're customer a piece competing we as their So of tank that DD&A. bolted smaller when acquisitions earlier actually -- take this -- as that to to here flows organic. tank, some our well. through a of want to as relates on then opposed But that they that site putting opposed a OpEx is -- piece fair of that and year cost a to goes decides obviously that competitor's site, put A amount and on take off back to

as We're variable the delivered. gallons around the to and really by a So tied large, I would XX% OpEx say we talk the up for about. quarter component we that is

and gallons increased only XX% around we XX%. OpEx our went So up by

from involved there's So all our helped by perspective, the that OpEx efficiency of down which drive some pennies per quarter. couple for gallon of in a

is right, And driven that propane underlying through Understood. additional flowing line? customer the that's gross acquisition their performance by in just now that move margin the gross margin the of really

you're Yeah, I right. think

our winning to large by that's our them. for I accounts. our the piece in margin and the line a the biggest seeing tends I that growth higher that quarter really end to significant working the our they're it. is They field, folks off and of story exchange, business. business out and are in that hats we hard mean be we're of think customer Tank and like

the under quarter. in So growth the well. growth. margin volume and driving cent winning per our gallon just gross slight $X.XX for We've that's we're gallon new and decrease seen We customers We're margin. that's saw as per margin leading or down

with So to of that customers a that really offset and need margin good it don't strategy. B, to over on we're mix; the servicing as feel get We customer but strongly can't to you in you those lot your work A, work customers, acquisition we the at then partial time was get have. and customer that a but relates them customers and margins relates you we in, with on profile,

So but other volume offset that, would going of good our terms that then OpEx, margins working, at with we're feel rate we've initial we sales but strategy be growth. higher to may a in increase customer customers initially, would lower slightly be seen but the over and accounts and time slower with what those that about of a to come is that than work the side partial

And really maybe talk helpful. notes, the but to how don't a to timing? you dead sales intent just, just this quarter? of sort the are of the between I execute beat solution to want can of asset bondholder or kind you you of MLP sort That's want Got first on about Do on it. sort thinking about then and a the you group to couple guys these of get horse

Ferrell. X% that through Mr. units to going that's our all the core this million I mean what it tell Mr. shares our work, to I early Yeah, our held unit of that five important by distribution I our is by core the held XX% employees is are it's of to ESOP us, or you is and right. but is Ferrell can orchestration that's to define are it's that's us, held the probably to clearly guess important by how through

diligently unit So we protect are working hard and that distribution. to

I to a are make bonds some unit that is details more solution we get So but we on the of sorry or you urgency or priority we're MLP in or with outside a wish now right time tell combination I MLP to more real and sure any hard moving you around that, the sense say refinanced OLP can that MLP bonds that come XXXX. place the or in just a what and thereof I is of to in whether actually the avoid working give at on and are that distribution level repaid later fiscal year level the disruption in this solution

don't I it. understand that public call. a on to you Got totally want negotiate

So for I that. answer. Thank the appreciate you

Yeah, Tarek. thank you,

concludes I back closing Schwartz now for turn remarks. will to the Q&A And call session. the this Doran

you Thank employees today. Rob. behalf I the your in company. Thank would time Ferrell interest Mr. of you very your much, thank On for you from and for say all X,XXX Ferrellgas,

we're question to a thank on Ferrellgas. in you done green facility moving for us provide all up lot would your of to year. behalf a future thank runway interest exciting an Our lot have has take the internally and we've for this all that moving we've opportunities and there question for We front Ferrell checks it marks well that are employees field. we out time keep that to of hard green what credit red We capital checks Mr. as bright working work see I long-term bright to line us we shown our we and a We company got you seeing of that momentum continue momentum. with advantage marks these of feel call pursuing. so that the of to your red that of say we're and It's again and in in work opportunities and

you today. your thank for So time

gentlemen, participation. call today's you thank and your And conference and you Ladies for many disconnect. now concludes this